Australia fights back against Zuckerberg with social media penalty fees

Labor will force big tech companies to pay for Australian journalism under a new scheme that seeks to punish platforms such as Facebook for refusing to sign content deals, raising the prospect of a financial penalty if they do not contribute to local news.

The dramatic move will pile pressure on social media platforms to honour a “bargaining code” with publishers or face the risk of being forced to pay to keep operating in Australia, amid fears the failure of an existing code would cost news providers $1 billion over four years.

Mark Zuckerberg’s Meta has threatened to withdraw news from its platforms if forced to pay. Prime Minister Anthony Albanese is poised to override that.Credit: Bloomberg, Oscar Colman

Prime Minister Anthony Albanese is expected to release the plan on Thursday after months of talks about how to respond to Facebook’s threat to block news content if it is forced to pay and concern in some quarters that a tax on big American companies would upset US President-elect Donald Trump.

The approach is expected to mandate financial costs on the platforms if they do not negotiate in good faith with news providers struggling in a hard advertising market and pay for articles shared with their social media customers.

If it succeeds, it will be a major boon for Australian media companies including Nine – the owner of this masthead – News Corp and Seven West Media, which have suffered major redundancies while Google and Facebook’s parent companies made a combined profit of $176 billion last year.

The government has opted against using existing Morrison-era laws designed to encourage tech giants to pay for news because they do not apply if a social media platform removes traditional media from its site, which Facebook’s owner Meta has done in Canada.

Meta’s refusal to continue its roughly $200 million in annual agreements with publishers, which expired this year, sparked the need for a fresh policy to fund media. Google, whose search function relies heavily on news, still has time to run on its first round of agreements but has not committed to renewing them at the same level.

The previous government set up the news media bargaining code in 2021 after then-treasurer Josh Frydenberg acted on concerns that social media had stripped journalism of a huge volume of advertisement revenue.

A key feature of the government scheme is that the financial penalty on the tech companies would be greater than the cost of striking multimillion-dollar commercial agreements with Australian partners, according to sources familiar with the government policy.

The government is also considering more funding for regional media, such as grants to help pay for local news, to act on the recommendations of a parliamentary inquiry that warned about the financial pressure on media outlets.

This masthead revealed in May that Meta had told the Albanese government it could use its Canadian approach of removing news in Australia as chief executive Mark Zuckerberg seeks to halt the growing number of nations imposing costs on his company.

The Australian policy seeks to get around the Meta threat by imposing wide-ranging financial penalties on tech platforms so that they could incur significant costs even if they seek to shut down news.

The media industry has speculated for months about a federal levy on the big tech companies to raise revenue that could be used to invest in media outlets, but ministers rejected that approach.

With Trump threatening to impose tariffs when he takes office in January, some were wary of a policy that could be seen as an attack on big American companies and might therefore justify retaliation from the White House.

One source aware of the issues, however, noted that the news media bargaining code did not present a problem for Trump or his allies. One of his key advisers, Elon Musk, owns social media platform X, which has not been required to pay under the existing code. Musk is an avowed rival of Zuckerberg and last year challenged the Facebook founder to a cage fight in the Roman Colosseum.

Meta slammed the prospect of a levy or other financial cost being imposed on the firm in Australia in October.

“The committee’s recommendations ignore the realities of how our platforms work, the preferences of the people who use them, and the value we provide news publishers who choose to post their content on our platforms,” a company spokeswoman said.

The architect of the news bargaining code, former competition chief Rod Sims, said US agencies made similar threats about the code.

“But their threats just did not materialise,” he said, adding his support for a new mechanism to bring Meta to the table.

Sims said this year the news media bargaining code had to impose obligations on the digital giants because Google held monopoly power in search and Facebook was “extremely dominant” in social media.

Sims estimated the commercial deals were worth $1 billion over four years to media outlets including the ABC, Guardian Australia, NewsCorp Australia and Nine.

Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.